Valuing the forest carbon stocks of the Brazilian Amazon Universidade Federal de Minas Gerais UF G Woods Hole Research Center IPAM – INSTITUTO DE PESQUISA AMBIENTAL DA AMAZÔNIA, Paulo Moutinho Britaldo Soares-Filho, Daniel Nepstad, Frank Merry, Hermann Rodrigues, Maria Bowman, Paulo Moutinho

CURRENT ECONOMIC MODEL FOR THE AMAZON FOREST Small economic value for the standing forest How to change this paradigm? Payment for ecosystem services..

How to compensate developing countries to reduce emissions from deforestation? Incorporating emissions reductions from tropical land-use change into the international climate regime (UNFCCC process) 65% deforestation

REDD = Reducing Emissions from Deforestation and Degradation n Some challenges: (1) establishing baseline; (2) monitoring; (3) estimating costs; (4) compensation mechanism "readiness"

How do we estimate the costs? Opportunity cost analyses Forgone profits* *a fraction of the costs of a REDD program

Opportunity cost = Rent from cattle raising Rent from agribusiness Rent from sustainable logging Rent for other forestry products (Brazil nuts, rubber, etc) Rent from logging

Interdisciplinary Model for Soybean Yield 88 polygons DATA SOURCES Agricultural Census ( ) Soil Parameters Climate Data Rooting DepthpH PrecipitationTemperature Solar Radiation Vera-Diaz, et al. An Interdisciplinary model of Soybean Yield in the Amazon Basin: the climatic, edaphic, and economic determinants. Ecological Economics, 2007.

Scenarios of Soy frontier expansion in response to Paving Hydro Powers: Jiraú and Santo Antônio Northern Corridor and Transoceanic Highway Potential area with high rents = 976,000 km2 or increase of 13% Pando, El Beni, Acre, and Madre de Dios U$/hec Rent

deforested Cerrado biome Paved road Unpaved road U$ 0/hec U$ 12000/hec Soy Net Present Value for 30 years discount rate of 5%

Cattle model (Merry et al., submitted) annual cattle rent Spatial model at 1km 2

deforested Cerrado biome Paved road Unpaved road U$ 0/hec U$ 1150/hec Cattle Net Present Value for 30 years discount rate of 5%

Logging rent model Rent= Wood_Price j * tax_deduction * processing_loss - (transportation_cost xy + harvest_cost j + milling_cost j )*interest_rate The model produces dynamic rent surfaces based on wood prices, harvest and milling costs collected for 588 milling centers located throughout the Amazon

(Merry et al., in press)

deforested Cerrado biome Paved road Unpaved road U$ 0/hec U$ 550/hec Sustainable Logging Net Present Value for 30 years

Opportunity Cost Carbon stock Rent from logging Rent from cattle raising Rent from agribusiness Supply curve / max Opportunity Cost Carbon stock Rent from logging Rent from cattle raising Rent from agribusiness Supply curve / max

0 tons/hec. 275 tons/hec. Adapted from Saatchi et al., 2007 Brazilian Amazon forest  47 ± 9 billions of tons of Carbon Carbon of above and bellow ground biomass

All models are integrated on the same modeling platform

Custo de oportunidade deforested Cerrado biome Paved road Unpaved road US$ 3-0 per ton US$ 0 per ton US$ 8-13 per ton US$ 3-8 per ton > US$ 13 per ton Opportunity costs

U$ 5.20 without logging

Calculating the op cost along the potential deforestation frontier

Simulated deforestation by 2038 by 2038 As the frontier advances opportunity costs fall

A scenario of deforestation reduced to 0 in 10 years (Not all op cost should be compensated)

Carbon cost over time (U$ ton)

Nepstad et al THE COSTS AND BENEFITS OF REDUCING CARBON EMISSIONS FROM DEFORESTATION AND FOREST DEGRADATION IN THE BRAZILIAN AMAZON / A proposal for a REDD program

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Thank you Britaldo Soares Filho LBA The Gordon and Betty Moore Foundation The David and Lucille Packard Foundation NSF CNPq British Embassy The Linden Trust/Roger and Victoria Sant/Joseph Gleberman Sponsored by